Are you aware of the serious implications of issuing a “bounced cheque” in the UAE? A cheque is more than just paper; it is a promise of payment, a legal commitment. What happens if that promise is broken? The legal repercussions both in the UAE and internationally can be severe. But is such a strict approach really justified? Probably not.
What Constitutes a Bounced Cheque?
A cheque may be considered bounced if:
- The drawer’s account lacks sufficient funds to cover the cheque at the date of issuance.
- The drawer has issued instructions to the bank to stop the cheque’s payment.
- The cheque has been improperly signed or intentionally altered to prevent payment.
- The drawer’s account is closed before the check can be presented.
Legal Framework and Changes in the UAE “Cheque Law”
Historically, bounced cheques were treated strictly under UAE Law, with harsh penalties including jail time. However, recent amendments effective from October 3rd, 2022 have shifted the approach towards decriminalisation for most cases, focusing more on civil remedies and financial penalties.
What Are the Key Changes?
- Reduction in Jail Time: The amendments aim to reduce incarceration associated with bounced cheques, promoting economic stability and efficient use of police resources.
- Mandatory Partial Payments: Banks are now required to make partial payments if the full cheque amount is not available, a shift from the previous requirement where such an instruction had to come explicitly from the account holder.
- Streamlined Court Processes: In cases where the bank does not make the ordered payment, individuals can directly approach a court’s execution judge for an order for full or remaining payment.
What Happens If a Cheque Bounces?
When a cheque bounces, the bearer is not obligated to settle the matter directly with the drawer. Instead, they can:
- Obtain a statement from the bank confirming the cheque’s bounce.
- Initiate legal proceedings, which may be criminal or civil, based on the nature of the case.
How Do Legal Proceedings Unfold?
- Police Complaint: If the drawer fails to settle the amount within the grace period provided in the formal notice from the recipient, the next step is to file a criminal complaint. This can be done through the local police or directly with the public prosecutor.
- Public Prosecution and Criminal Court: If the issue escalates, it moves to the public prosecution and possibly to criminal court. The court assesses the situation based on provided evidence and may impose fines or imprisonment based on the severity and amount involved.
Can You Still Pursue a Civil Claim?
Absolutely. Initiating a criminal proceeding does not bar the aggrieved party from pursuing civil remedies to recover the amount owed. The civil courts can enforce payment, even attaching assets or imposing additional penalties if the court’s orders are not followed.
CRIMINAL LIMB:
Significant amendments in “check bounce” regulations in the UAE mostly relate to:
- higher threshold of a criminal prosecution for “bounced cheques”;
- the reduction of jail time for “bounced cheques” if a person is found guilty.
A criminal case can be pursued if any of the following situations occur:
- The drawer instructs the bank not to cash the cheque prior to the specified day.
- The drawer closes the account/ withdraws the available balance before the due date.
- The cheque is intentionally signed inaccurately.
- The drawer deliberately writes/ signs the cheque incorrectly.
Penalties for Bounced Cheques
- Cheque Amount – under AED 50,000: AED 2,000 fine.
- Between AED 50,000 and AED 100,000: AED 5,000 fine.
- Between AED 100,000 and AED 200,000: AED 10,000 fine.
- Forgery or Counterfeiting: At least one year in jail and fines between AED 20,000 and AED 100,000.
- Seized articles related to check forgery can be confiscated.
- The court may also prohibit the convict from engaging in commercial or professional activities for up to 3 years.
- Instructing dishonour before the drawing date, closing an account intentionally, or signing a check to prohibit its honour can lead to imprisonment for a period of 6 months to 2 years.
!!! N.B.: The criminal action for bounced checks may be dropped if the entire value is paid before forced execution procedures or if conciliation is reached.
What should You do when facing a situation with a “Bounced Cheque”?
- Communicate: Often, quick communication with the drawer can resolve the issue without further legal action.
- Understand the Law: Knowing the thresholds and legal procedures can help you navigate the process more effectively.
- Seek Legal Advice: Consider consulting a legal expert to understand the best course of action, particularly for large amounts or repeated offences.
How to check the status of a bounced cheque case in the UAE?
You can also verify the status of a “bounced cheque” case on your own – on the app or website of the Dubai Police or the Dubai Judicial Department. You will need to fill in the fields: case number, its year and type, and the form of organization.
If you want to report unfunded or bounced checks, you can do so on the Dubai Government website.
If you find it difficult or do not want to deal with it on your own, we are always ready to help you. Contact us and tell us about your situation.
Conclusion: Why Should You Care?
Issuing a bounced cheque is not merely a financial misstep but a legal issue that can tarnish your financial integrity and legal standing. With the laws now focusing on financial penalties and reducing jail time, understanding these nuances is crucial for anyone engaging in financial transactions in the UAE. Are you ensuring that your cheques are covered? If you find yourself involved in a bounced cheque situation, either as the victim or the accused, it is essential to consult with a specialised lawyer. Navigating the complexities of such legal matters requires professional expertise to ensure your rights and interests are adequately protected.
INTERPOL INVOLVEMENT
Unfortunately, “bounced cheques” can not only result in criminal prosecution on the national level in the UAE, but also lead to issuing an Interpol Red Notice. Our lawyers have extensive successful experience in handling such matters removing the data of individuals concerned from Interpol’s files.
